Oil drops to lowest level in 5 years .hurriyet2008-detailbox-newslink { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:none; color:#000000;} .hurriyet2008-detailbox-newslink:hover { font-family: Arial, Helvetica, sans-serif; font-size:13px; font-weight:bold; text-decoration:underline; color:#990000;} LONDON - Crude oil fell below $34 on Friday to its lowest level in almost five years as the global economic slowdown overshadowed OPEC's record supply cuts.

U.S. light crude for January delivery fell $2.64 to $33.58 a barrel by 11:50 GMT. It earlier touched $33.44, the lowest since early February 2004.

London Brent crude was trading 18 cents up at $43.54.

Oil prices have fallen by more than $110 from their peak above $147 in July. They look set for their second biggest weekly decline since 2003.

"Until traders see a sustained drop-off in the rate of demand destruction, the market will have a hard time establishing a floor," Jonathan Kornafel, Asia Director of Hudson Capital Energy, said. "From a credibility standpoint, OPEC has no choice but to bite the bullet for the next few months."

Oil has continued to drop despite pledges by the Organization of Petroleum Exporting Countries last week to remove 2.2 million barrels per day from its supply, which will be the largest ever reduction by the producer group.

Saudi Arabia’s position
OPEC kingpin Saudi Arabia's Oil Minister Ali al-Naimi, speaking in London, said on Friday the kingdom would be pumping less oil in January and would be at its new output target in line with the group's latest cut.

Other key markets were also falling on Friday. The dollar looked set for its biggest weekly decline since 1985 and world stocks fell as concerns about the U.S. economy worried investors in the last full trading week of 2008.

Because of the worldwide credit squeeze, many analysts now expect a drop in oil use this year, the first demand contraction since 1980.

Some doubt OPEC, whose third production cut since September has brought its total reduction to over 4 million bpd or 5 percent of world supply, will fully implement the agreed cuts, further weighing on prices.

"We believe that full implementation of the cuts is unlikely," said Goldman Sachs analysts in a note to clients.

Response to recession
Nobuo Tanaka, executive director of the International Energy Agency, or IEA, said on Thursday oil prices were responding to the global economic recession and investors would have to see how much actual supply cuts OPEC would deliver to the market.

But OPEC President Chakib Khelil said on Friday he believed oil prices had found a floor around current levels.

"I don't believe there is any reason for it to fall any further. I don't see it going lower," he told Reuters in London.